Deal:
Purchased $75,000
payments $700 month for 10 years.
How should I sell?
value is $120,000 - $125,000
Needs about $ 5,000 repairs.
I could flip and cash out for a nice profit.
or should I owner carry/lease option and get some interest.
let me know what you think. Thank you :biggrin
Do whatever your business model/plan says is BEST for you.
Hi,
Just make sure there is full disclosure with both your seller and your buyer as failing to disclose the whole transaction is grounds for legal and possible criminal fraud.
Your seller has to grant you permission to sell the property if their underlying note is going to stay in place and your buyer has to know the underlying note primary note is not in your name and is held as a “Owner Carry”
If I am understanding you, you bought this property with an underlying owner carry loan?
If this is correct and everyone agrees and you’ve made full disclosure in writing then set up an escrow servicing account to receive payments and pay the underlying payment and taxes and property insurance.
This way there is no way the underlying payment will not be made and no way your end buyer / lease option holder can lose!
There was a very recent case in Texas where the Feds convicted an investor of fraud for not getting permission from the seller, not disclosing to seller and failing to tell the buyer and receiving payments directly which he was spending and failing to pay the underlying debt. Full disclosure was one of the primary reasons for the conviction as both original seller and end buyer knew nothing about each other and had not granted or agreed to this arrangement.
If I were you and you have an underlying note I would sell outright and get out from under the whole thing by new financing and a clean sale!
GR
I would lease option the deal to a tenant buyer. You get the best of both worlds. Long term income and upfront profit.
UPDATE:
How does this deal sound? RECAP -
Purchased for $75,000 - $10,000 down 10 year loan 7% monthly payment $740 month.
selling wrap around
Selling for $105,000 - $20,000 down 5 year loan 5% monthly payment $1604 month.
please advise Thank you
Do the interest rates have to be the same on wrap deals?
Also the 1st loan is longer (10 years) than the 2nd (5 years).
I am not sure what would be the best alternative for you; but, it’s always a good rule to be able to afford the property and go over your budget.